Security News > 2021 > July > Cyber insurance failing to live up to expectations

Key findings To date, cyber insurance has failed to live up to expectations that it may act as a tool for improving organizations' cyber security practices.

Not only is cyber insurance seen as a way for organizations to reduce the impact of cybercrime by transferring financial risk to insurers as the market grows and matures, cyber insurers are seen as potentially able to fulfil the role played by insurers in other industries.

Based on interviews and workshops with experts across the insurance and cyber security industries, government, academia, the paper identifies an insurance industry that is not only struggling to understand cyber risk itself, but that it is 'struggling to collect and share reliable cyber risk data that can inform underwriting and risk modelling'.

The cyber insurance market is yet to embrace use of financial incentives or impose security obligations to improve the cyber security practices of policyholders.

As a result, while some cyber insurers are beginning to move in the right direction, the industry is still struggling to transit from theory into practice when it comes to incentivising cyber security.

Due to these shortcomings, the impact of cyber insurance to the goal of improving cyber security practices is 'more limited than policymakers and businesses might hope'.

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